ADVANTAGES AND DISADVATAGES OF FORMING PUBLIC COMPANIES

The paper describes advantages and disadvantages of forming public companies in the Polish reality and constitutes a manual for managers of companies intending to issue their shares publicly. The opinions presented here are based on the existing legal regulations which make companies verify their plans connected with raising capital through the public issue of shares. From the microeconomic point of view the Warsaw Stock Exchange plays an important role mainly for investors but also for the traded public companies. The development of the company, the rise in its sales and gained profits is possible in a long term only if the capital base is increased. The capital base is necessary for financing production properly, turnover assts, R & D schemes etc. If the rise is expected quickly the net profit as the source of financing is not sufficient. The method of raising funds is a critical problem. The issue of shares is only one of them and the company cannot expect satisfactory effects if it decides to issue shares in the situation where for example obtaining a bank loan would be a more appropriate way of increasing its capital base.